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06 December 2018
On 8 August 2018 the Competition Commission of India (CCI) approved Walmart International Holding's acquisition of 51% to 77% of the outstanding shares in Flipkart Private Limited.
The CCI noted that both parties were engaged in business-to-business (B2B) sales and that, as such, there was a horizontal overlap between them in the relevant market (ie, the pan-India market for B2B sales). The CCI concluded that Flipkart and Walmart were "neither close competitors in the B2B sales nor have a combined market share that raises competition concern".
The CCI noted Walmart's submission that the Indian retail market was estimated to be worth $672 billion, of which 30% to 40% was B2B sales. It also observed that Flipkart and Walmart's combined market share would remain less than 5%. Since Walmart's market share in B2B sales in India was less than 0.5%, the CCI noted that the incremental change resulting from the proposed acquisition was insignificant.
The CCI further noted that even if the organised sector was considered separately, it appeared to be competitive due to the presence of players such as Reliance Retail, Metro Cash and Carry and Amazon Wholesale. With respect to any vertical overlaps, the CCI noted that on account of regulatory restrictions, there was vertical overlap between Walmart's B2B business and Flipkart's online marketplaces. As such, the CCI approved the acquisition.
For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4249 2525) or email (firstname.lastname@example.org). The Vaish Associates website can be accessed at www.vaishlaw.com.
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Man Mohan Sharma